The Federal Reserve is backing up JPMorgan Chase & Co.'s revised offer to buy US investment bank Bear Stearns Cos.

The Federal Reserve Bank of New York has announced that this action is being taken by the Federal Reserve with the support of the Treasury Department to bolster market liquidity and promote orderly market functioning.

Mike Santoli is the associate editor at Barron's Magazine.

"So, at least now JP Morgan is taking an extra billion dollars, the first billion dollars of any losses to that piece of the portfolio and it seems as if this was supposed to head of criticism JP Morgan was given too good of a deal to take on these liabilities."

The Fed's action comes soon after JPMorgan Chase has increased its offer for investment bank Bear Stearns to US $10 per share, from a bargain-basement price of US $2 per share.

The new deal values Bear Stearns at about $1.19 billion, still a fraction of what the company was worth before its sudden near-collapse earlier this month.

Bear Stearns shares have jumped $5.49, or 92 percent, to $11.45, while JPMorgan has raised $1.73, or 3.8 percent, to $47.70.

Wall Street advanced Monday on JPMorgan's new offer for Bear Stearns and a stronger-than-expected housing report.

The Dow Jones average rose 187 points, or 1.5 percent, to 12,549. The Standard & Poor's 500 index rose 20 points, or 1.5 percent, to 1,350, and the Nasdaq composite index rose 69, 3.0 percent, to 2,327.

Markets in Europe were closed for Easter on Monday.